The procedure for obtaining a license from the SEC to operate a Foreign Company Representative Office in the Philippines is similar to that of the Foreign Company Branch Office.
The required minimal inward remittance of funds for a Foreign Representative Office as working capital is US$ 30,000.00 as opposed to the minimum paid up capital of US$200,000.00 of a Foreign Branch Office as mandated by the SEC regulations. Every year the parent company must remit at least US$ 30,000.00 to cover operating expenses.
A Representative Office of a foreign corporation is not allowed to derive income from its operations in the Philippines. All of its expenses must be covered by remittances from the parent company. Usual activities allowed are dissemination of information, promotion of company products and quality control of products for export. It is not allowed to offer services to 3rd parties.
A Representative Office is not subject to income taxes as none of its income is derived from the Philippines and is not qualified to register with the BOI or PEZA authorities.
BC Philippines Lawyers will assist you with the procedure and registration of your business with the pertinent government agencies for a quick opening of a representative office in Philippines.
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Randy, a person can remarry once they obtain a decree of annulment.
If i start a rep office in Philippines. How will I earn my income and pay income tax if a rep office cannot be registered at the BOI
How does this exactly work?
Thanks in advance.
Kris, you can open a domestic corporation or a branch office.
Representative office of a foreign corp is not subject to income tax as no income is derived in the Philippines..but how about municipal permits and licenses, will they be taxed on their remittances for their operating expenses in lieu of gross receipts?
Emma, The remittances will be considered as the gross receipts.
Can a representative office hire filipino employees? how will their tax be treated then? any specific BIR ruling for this set-up?
Norina, yes a representative office may hire Filipino employees. Their salaries are taxed like any other employee working in the Philippines.
As a foreign representative office in Philippines, can we promote products to philippine market but they pay the services or products to the oversea HQ?
Erwin, Yes you can.
I have a Singaporean friend who has an existing Manning Agency in Singapore, He’s looking into setting up a Satellite office here in Manila to hire Filipino Seafarers and wants me to manage it. Do i still have to register with the POEA as a new Recruitment Agency and submit all the documents just like a newly established filipino owned recruitment agency? Thanks.
Mark, overseas recruitment agencies may only be 25% foreign owned. Yes, you will have to register with the POEA and comply with their rules.
Overall which is better from the point of view of the foreign company, Foreign Company Branch Office or Foreign Representative Office?
Paul, it really depends on what activities the company will undertake in the Philippines.
For RHQ and ROHQ the managerials and technical positions are taxed at 15% is this also applicable for a representative office?
No, the 15% income tax rate is not applicable to employees of Representative Offices.
My friend want to open a sattelite office of their company only for the purposes of construction designs, the US company’s nature of business is construction. He will hire filipinos to make the designs here which will be submitted to the US for the actual construction. Technically, he will only need the manpower for engineering designs. Can this be considered a representative office since theres no income derived within the Philippines?
No, a representative office can not be used for that purpose. You have the option of a corporation or a branch office.
Can a representative office buy products here in the philippines and send them to the mother company abroad?
No, a representative office may buy products in the Philippines for export. It may find suppliers and inspect the merchandise before shipping.
Is there a limit on the number of employees a Foreign Company with a Representative Office here in the Philippines can hire? And a Call Center for a foreign company be registered as a Rep Office here in the Philippines?
A company in Singapore wants to have representative office here in Philippines, as a cost center, can they transfer there back office operations here like bookeeping or admin? Can this be considered a representative office since there’s no income derived within the Philippines?
A Foreign Company is currently looking for an alternative way to obtain or hire staff that will be going to Japan. The Company is considering a possibility of establishing a representative office in Philippines to hire Filipinos to be sent to Japan. Can this be considered as an activity of a representative office? Thank you in advance.
Philippines Representative Office
A Representative Office of a foreign corporation is not allowed to derive income from its operations in the Philippines. All of its expenses must be covered by remittances from the parent company. Usual activities allowed are dissemination of information, promotion of company products and quality control of products for export. It is not allowed to offer services to 3rd parties.
It is required to have an initial minimum inward remittance in the amount of US$30,000 to cover its operating expenses and must be registered with the SEC.
To hire Filipinos to be sent to Japan requires a POEA recruitment license, recruitment companies may have a maximum of 25% foreign ownership.
The Japanese client can do direct hiring through the POEA instead of opening a company in the Philippines.